The industrial property sector continued to grow in the first quarter of 2026, with transportation and logistics operations accounting for as much as 48 percent of industrial property demand, while manufacturing represented 18 to 20 percent and other services comprised 15 to 18 percent of total supply.
However, the ongoing Iran conflict is prompting lessors to consider raising lease rates as construction and operational costs increase.
These findings were highlighted in the latest 2026 Special Market Report released by Prime Philippines Research, the country’s leading property management and consultancy firm.
The report showed that industrial sector supply climbed to 1.3 million square meters in the first quarter of 2026 from 1.2 million square meters previously, indicating an upward trend in vacancy rates. The decline in occupancy was attributed to the entry of new supply into the market and tenants shifting to Grade A facilities to support day-to-day logistics operations.
Warehouse facility supply posted an average annual growth rate of 1.8 percent since 2017 and is expected to continue expanding through 2028.
Despite higher market supply, lease rates remained firm from the fourth quarter of 2025 to the first quarter of 2026. However, the report noted that the effects of the Iran conflict are pushing lessors to consider increasing lease rates amid rising construction costs.
Warehouse supply is also expected to expand beyond the National Capital Region and nearby provinces into key areas in the Visayas and Mindanao.
Provincial demand remains concentrated in major economic corridors such as Batangas, Bulacan, Cavite, Cebu, Davao del Sur, Laguna, and Pampanga.
Bulacan recorded the highest occupancy level at 98.39 percent, although this reflected a slight dip from the fourth quarter of 2025. Batangas posted the biggest take-up rate in the first quarter of 2026 at 90.47 percent, rebounding from a sharp decline in the previous quarter, while occupancy levels in other provinces remained stable.
The report also cited continued demand and the influx of new warehouses in Cebu, helping keep lease rates in check. Cebu’s warehouse supply stood at 5 million square meters, with average lease rates at PHP246.9 per square meter.
Cold chain storage supply in Cebu has also tightened significantly, with vacancy rates at only 2 percent, as industrial decentralization continues to create emerging logistics hotspots in the province.
Joy Rosario, head of the Industrial Market Division at Prime Philippines, said supply expansion and evolving lease strategies are expected to define the Philippine industrial market in 2026.
Based on the report, nationwide industrial supply is projected to grow by approximately 1.3 to 1.5 percent by the end of 2026. Transportation and logistics are expected to remain the primary demand drivers, alongside shifts in end-user supply chain preferences.
